Major pharmacy chain files bankruptcy after near $1 billion lawsuit

The healthcare industry has taken many hits recently , and it took yet another hit this week after a CVS subsidiary filed for chapter 11 bankruptcy following a near $1 billion lawsuit for filling invalid prescriptions.

Omnicare , filed for bankruptcy Monday, Sept. 22, after being ordered to pay $949 million in federal court, filings show.

The Department of Justice found Omnicare liable for "fraudulently dispensing drugs without valid prescriptions to elderly and disabled people in assisted living facilities and other residential long-term care facilities," in April.

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After a four-week trial, it was found that Omnicare billed Medicare, Medicaid, and TRICARE for over 3 million false claims which resulted in $135,592,814 in damages, the DOJ said .

The Department said the government is entitled to three times that amount — which pans out to be $406,778,442 — plus statutory penalties.

According to AP News , the DOJ charged that Omnicare put thousands of patients at risk because people were taking the same drugs for months, or even years, without talking to a doctor.

CVS Health spokesman Mike DeAngelis said the claims are untrue and the company plans to "vigorously defend the matter in court," AP reported .

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Some of the drugs Omnicare was found liable of dispensing without valid prescriptions were for serious conditions such as dementia, depression and heart disease.

The company sought court protection for assets of at least $100 million and liabilities between $1 billion and $10 billion.

The $949 million lawsuit is the company's largest unsecured debt.

The company said it remains " fully focused on meeting the pharmacy needs of its customers and long-term care residents ."

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Omnicare's parent company, CVS issued a statement earlier this week announcing the company's ongoing strains.

CVS said the company was filing bankruptcy voluntarily "to resolve issues related to its recent litigation," adding Omnicare "also intends to use this process to address other financial challenges."

Such challenges include a restructuring plan or sale strategy.

Omnicare's President, David Azzolina claims the government knew about and approved the company's "technical violations of pharmacy law."

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